China's Overseas Direct Investment

This assignment provides a detailed analysis of China's Overseas Direct Investment (ODI) in various sectors, including mining, manufacturing, and information technology. The report highlights the importance of ODI in driving economic growth and development in China, and discusses the government initiatives and policies that support this trend. It also explores the implications of ODI for global business and the benefits it provides to businesses operating in China.

Running head: CHINA AS A GLOBAL INVESTOR IN BUSINESS
CHINA AS A GLOBAL INVESTOR IN BUSINESS
Name of the Business
Name of the University
Author Note

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
Introduction
The development of the Chinese economy is creating strains in the international market.
China is considered as one of the largest trading nation and the second largest economy. Almost
$2.4 trillion net foreign assets were estimated in 2015 in China compared to Japan’s net foreign
assets of $3.6 trillion. The reason behind the account surplus is the enhancement of net foreign
assets (National Bureau of Statistics of China 2018). In China, most of the foreign assets
investments come from the central bank by international reserves, invested by the U.S. as well as
different kinds of treasury bonds and similar instruments. As the investment opportunities for the
native business diminishes in China, excess capability and declining profitability has also
increased in other nations, resulting in a commercial outflow of capital to run at a high level. “Go
Global” investment strategy by China has made an extravagant foreign investment which
amounted to USD 900 million it was also equivalent to 2.2% of China's inward FDI in the same
year (National Bureau of Statistics of China 2018).
Foreign Direct Investment inward flow in China
Foreign direct investment is a long-term relationship between investor and enterprise who
are cumulatively heading towards the objectives of the business organisation which in turn
impacts the economy of the country. Industries operating in an economy can profit through this
process with advantages in the supply chain management as well. The industry gets profit due to
Foreign Direct Investment and an overall economic development was introduced in China
(Gilboy 2016). The flow of FDI is the sum of three components such as equity, capital,
reinvestment earnings and investments; these aspects are connected with the inter-company debt
transaction. The technical enhancement, administrative development and increase level of

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production is the area of focus in this business module. The significant portion of emerging
market change is associated with the investment as well. In case of global investment, accurate
reflection can be judged through the financial condition of China and series of domestic incomes
that China acquired through this process.
In China, there are different special economic zones that were announced on the 15th
session of fifth NPC. Zhuhai, Shenzhen, and Shantou had been announced officially by the
government and after that Xiamen was added to the special economic zone (Cavusgil et al.
2014). According to the statistic provided by the China government, in between 1979 to 2006,a
sum of 596,110 projects is run by the foreign direct investment. A utilizing value of US$1.67
trillion on foreign capital and a huge contract value had signed in that time (National Bureau of
Statistics of China 2018). China became the largest receiver of FDI among the developing
nations. Since the biggest portion of FDI has come from Taiwan and Hong Kong, China can gets
a good amount of products from these countries as well. 57% of FDI is single-handedly delivered
by Hong Kong. Almost 1000 foreign companies’ regional headquarters are situated in Hong
Kong and this is the reason channelized investment is persisting in Hong Kong.
Basic drivers behind the change
There are some key drivers of FDI are as follows:
 economic growth
 rapid economic
 industrial development
In case of economic growth, the business organisations that come up in the Chinese
market are the main source of income as GDP. Technology plays a vital role in this situation.

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The country has impactful performance in technology and that main reason for export in the
country and industrial development. Resource movement and logistic facilitation are two other
aspects that impacts industrial market. Logistic management is another productive aspect that
will come in transforming the link and provide a constructive drive for the nation.
The most important analysis is channelizing through China, in recent years and foreign-
invested firms are taking advantage of them. The reason behind why China has become a global
hotspot is because the nation is manufacturing their own products and in case of diverse aspects
of finance, marketing and accounting. China is now the official member of WTO. The nation has
a huge domestic market which impacts the growth of economy, political stability, policy
consistency and legal reformation of China is the major aspect of the distribution of their market
(Peng 2012).
Industries are rapidly growing in China and in case infrastructure and production are the
reason behind global development. Realizing the potential of the industry and possible outcome
it is important to grab the market and make use of the opportunities of the external environment.
A significant contribution to large-scale employment is catering to the employment requirement
of the native people and they will develop the work culture as the nation’s economy is much
known by them. In recent past, direct and indirect employment is around 13.1 million people and
the GDP has risen up to 2.23% to 4.10%, which is an exceptional change that comes into the
drilling of factors.
Chinese Government Plan
The Chinese government has ethics and cultures that are delivered in a written form as
rules and legislation (Ruggie 2013). Foreign Banks are established and their business is also

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
affiliated with China as well. The minimum capital of RMB is 1 billion and each brand must
have a minimum of 100 million (National Bureau of Statistics of China 2018). The financial
export market in China delivers bilateral trade execution in some place and all the components
have synthesized the level of business opportunities in China as well.
China’s Overseas Direct Investment
The foreign direct investment opportunities in China are high in theyear2013-2016. Many
investments from different countries happen in those sessions which also contribute to the
economic development of China. Tapping into a new market and gaining superior technology
used by the overseas foreign companies. Belt and Road is an Initiative that has been taken by the
Chinese government. This initiative has helped the government develop connectivity with the
Eurasian countries. It is also a way to ocean-based Maritime Silk Road and land-based Economic
belt process. In the last few years, Belt and Road Initiative process has focused on the
infrastructure investment, construction materials, automobile, real estate, railway and highway
equipment transfer and iron and steel materials. The project is one of the most valuable prospect
which covers more than 68 countries and enhancement of 40% global GDP. Opportunity and risk
factor both come up with the simultaneous way and market opportunities for investment have
risen up due to that process (Ahuja et al. 2012). Almost 8000 Chinese-funded companies
offshore by the Ministry of Commerce and total investment recorded as $93.8 billion (National
Bureau of Statistics of China 2018). The growing global stock of Overseas Foreign Investment
recorded in 2007 was $117.9 billion. The global enhancement of revenue and demonstrative
approach to the international brand has got some advantages in China and that is the most
important part of ODI. The Belt and Road Initiative process deliver economic cooperation as
well and expansion of investment is impacting on this.

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
China’s old-fashioned monopolies, state-run efficacies, and community facilities are
steadily pretty available to secluded and even foreign investment. China will pursue to encourage
wider, more bi-directional directness, build foundations and devices that encourage teamwork
and are well-suited with global trade and speculation guidelines. In case of emerging industries
business opportunities are high and that is the reason most of the innovative economic structure
has been undertaken by the country as well. Increasing openness and global integration process
are also conducted through the government and cross-culture agricultural agreement also boosted
up the contradicting nature of orientation.
China is among the top ten countries to have contractual projects. The commercial
service areas are connectively advanced in China and lots of other countries are self-driven by
that process. The purchasing and selling goods are centralized by several ministries and that is
the reason Chinese ministry has evolved some sectional change in their government
(Nolan2012). Bank of China, China Council for the Promotion of Foreign Trade section drives
the trade national policy of China. Trades are separated from the production, thus a loss in
production for any company has not directed apparent effect on the country’s economy. Most of
the trades are confines in the communist countries so the range of monopoly situation in business
is present in that nature. In China, the state-owned monopolized operations in business
dampened into the production sector in China and that also not linked with the market situation.
The market always wants the competitive figure and China is doing that only to establish their
nature of ODI in front of international business scenario.
China selects their direct investment in theU.S. in most of the cases but in 2016 the
projected outcome has turned a bit and Singapore has overtaken theU.S. in case of foreign direct
investment ration in China. The paper states that China’s Ministry of Commerce has witnessed

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
nonfinancial ODI rangeof 44.1 percent enhancement to $170 billion(National Bureau of
Statistics of China 2018). Though, the inclination in 2017 has been in desolate dissimilarity.
Chinese policymakers have required controlling “illogical” ODI and have determined on savings
toward the Belt and Road proposal (Brødsgaard 2012). Singapore and Malaysia, these two
nations have attractive BRI destinations and they have invested climate to offer good
opportunities in business at a low level of risk. That is the reason most of the associate
investment takes place in those countries and optimum balance present in both the countries.
Rise in Overseas Direct Investment in China
The Chinese government enhances the overseas business opportunities and noticed on the
foreign currency reserves at home. In comparison with Japan, American firms are holding the
assets in that nation but in most of the case expected foreign currency, thereserve is not met with
the desired amount (Lasserre 2017). Approval of domestic trade policies and adapted formation
of new business results are the concern idea that produces more productivity in China. In China,
the reformation of theforeign direct system was revised after the implementation of
SEZs(Ramasamy et al. 2012). Almost 30 up foreign trade companies are set by the government
and trade licenses are also provided to them for business but in most of the cases challenges will
arise when they have to find the easier way to mitigate those. In case of agricultural and rural
products the rate of manufacturing is high and that provide less opportunity for the native nation
to do the business, in that case, the importance of overseas business come information where
other countries have this opportunity to invest in China. This is the particular time when trade
liberation happens and through this process, China becomes the largest porter of clothing and
textiles.

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
Current development and inflow of FDI in China
The distribution of country’s outward FDI flows in the industry level has segmented into
different sections. Wholesale, retail, trade mining, fishery, information technology, construction,
transportation, storage, real estate, washing, coal mining all these sections are under the ODI
aspect of China. In case of metal mining resources, are theimportant and sectional distributions
of theproduct are important for the development of national economy in China. As per the graph
is given in appendix 2, mining is the largest sector from all as it contains 40.3% of total FDI
concentration and most of the resources are collected from overseas companies. Though mining
section decreases in 2015 compared with 2014 as well (Davies 2016). The restricted form of the
industry and sharp contrast of accounting sector is the major aspect of annual growth and that
flows with the diversified range of products (Deng 2013).
Conclusion
Therefore, all the discussions are addressing towards the overseas direct investment in
China has surpassed the foreign direct investment. The report consists all the FDI and OFDI
driving issues of China and the economic balancing situation that China has created in these
recent times. The report also highlights the government initiation that possesses all the rules and
regulations of business and development of inflow business FDI in China. The rise of ODI in
China is discussed in the report and how it provides the benefit for the business organisations
prevalent in china.

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
References
"National Bureau Of Statistics Of China". 2018. Stats.Gov.Cn. http://www.stats.gov.cn/english/.
Ahuja, Mr Ashvin, and Mr Malhar Nabar. Investment-led growth in China: Global spillovers.
No. 12-267. International Monetary Fund, 2012.
Brødsgaard, Kjeld Erik. "Politics and business group formation in China: the Party in
control?." The China Quarterly 211 (2012): 624-648.
Cavusgil, S. Tamer, Gary Knight, John R. Riesenberger, Hussain G. Rammal, and Elizabeth L.
Rose. International business. Pearson Australia, 2014.
Davies, Ken. "China investment policy: An update." OECD Working Papers on International
Investment 1 (2013): 1.
Deng, Ping. "Chinese Outward Direct Investment Research: Theoretical Integration and
Recommendations. 通 过 研 究 中 国 对 外 投 资 发 展 理 论 : 现 实 与 建 议 ." Management and
Organization Review 9, no. 3 (2013): 513-539.
Gilboy, George J. "The myth behind China's miracle." In SEEKING CHANGES: The Economic
Development in Contemporary China, pp. 1-16. 2016.
Lasserre, Philippe. Global strategic management. Palgrave, 2017.
Nolan, Peter. "Is China buying the world?." Challenge 55, no. 2 (2012): 108-118.
Peng, Mike W. "The global strategy of emerging multinationals from China." Global Strategy
Journal 2, no. 2 (2012): 97-107.

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
Peng, Mike W. Global business. Cengage learning, 2016.
Ramasamy, Bala, Matthew Yeung, and Sylvie Laforet. "China's outward foreign direct
investment: Location choice and firm ownership." Journal of world business 47, no. 1 (2012):
17-25.
Ruggie, John Gerard. Just Business: Multinational Corporations and Human Rights (Norton
Global Ethics Series). WW Norton & Company, 2013.
Thebeijingaxis.com. 2018 Available at: http://www.thebeijingaxis.com/en/ [Accessed 28 Feb.
2018].

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
Appendices
Appendix 1
Figure 1: ODI expand in China
(Source: Gilboy, George)

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CHINA AS A GLOBAL INVESTOR IN BUSINESS
Figure 2: Sectional Distribution of Outward Foreign Direct Investment in China
(Source:Peng, Mike)